IV. Effects of Trade on Gender Equality in Labour Markets and Small-scale Enterprises

The effects of trade on labour markets vary according to each country’s specific growth patterns and strategies, their level of exposure to international trade and their relative capacity to adapt their national industries and productive sectors to international competition. National labour markets can only reap the full benefits from trade liberalization when the country’s economic and social sectors are able to adapt to emerging patterns brought forward by international trade competition.

Evidence shows that international trade tends to increase the availability of formal but mostly low-skilled, labour-intensive and low value-added jobs in developing countries, with most of these jobs having been filled by women in recent decades.(see note 19) Women workers have been particularly sought by the export-oriented industry because women workers are generally less unionized; consequently, they have lower bargaining power over their wages and working conditions, and often work in substandard labour conditions.(see note 20) Export Processing Zones (EPZ) that have contributed to the export success of many developing countries in East and South East Asia and Central America since the late 1960s have largely employed female workforce. A large number of women have benefited from new employment opportunities.(see note 21)

However, the significant increase in women’s paid employment that is observed with trade expansion is not matched by an equal reduction in poverty, especially in women-headed households.(see note 22) In many cases, in their efforts to increase competitiveness, export-oriented industries have focused on employing women workers by taking advantage of existing gender inequalities in women’s access to economic and labour rights. EPZ are often exempted from following the national provisions of labour legislation, leading to working conditions that exploit the desperate needs of many women and men for some forms of job.(see note 23)

And the positive impacts of trade on women’s employment participation may not be sustained. Shifts to higher-skilled or capital-intensive forms of production, along with firm mobility, may jeopardize employment opportunities for women in export-oriented industries.(see note 24) Rapid industrialization and the reorientation of export industries towards higher value-added, which requires higher-skilled and mobile labour, can exacerbate gender-based occupational segregation, leaving behind women in low-skilled and low-paid jobs, and leading to the relocation of jobs from the formal to the informal economy. For example, South-East Asia faced a severe “defeminisation” of its manufacturing labour force in the last two decades as the industry was upgrading, in contrast to the high-levels of female participation in the sector in the 1980s. (see note 25)

Trends in women’s employment

Recent international trends have shown that women’s share of labor force participation has increased, but that women are still concentrated in labour markets and sectors that leave them in vulnerable employment with poor employment conditions and little or no social protection. They also face persistent occupational segregation (see Text Box 2) and gender discrimination in wages.(see note 26) In Africa and South Asia, large employment differences remain between men and women, with women’s employment being largely relegated to unpaid and vulnerable activities.(see note 27)

In Which Sectors Do Women Work?

Out of the three billion people who were employed around the world in 2008, 1.2 billion were women (40.4 percent). Only a small proportion of employed women were working in industry (16.1 percent in 2008, as compared to 26.4 percent of men); while the large majority were devoted to agriculture (37.1 percent, as compared to 33.1 percent for men) and, increasingly, in the services sector (46.9 percent, as compared to 40.4 percent of male employment). At the regional level, however, the picture is different. In Sub-Saharan Africa and South Asia, for example, the agricultural sector makes up for more than 60 percent of all female employment.

To reap the full benefit from trade liberalization, economic actors must adapt - i.e. move from declining (import-competing) sectors to expanding (export) sectors. In this regard, women are relatively disadvantaged, as they tend to face more constraints than men in labour mobility, owing to structural segregations of labour markets that are deeply rooted in discriminatory social and cultural norms.

Important structural barriers are preventing women to benefit from trade-orientation; these include: women and girls' limited access to education and skills, including in cutting-edge educational fields; de jure and de facto discrimination against women in the control over economic and financial resources, productive assets and access to financial services; and women’s limited access to new technologies for production, training, information and marketing.(see note 28)

Moreover, because of gender stereotypes, women are assumed to be better suited for certain types of work (for example, attitudes about women’s better suitability for picking and packing products, in the horticultural sector, or for sewing, in the garment sector; or women's suitability for repetitive and manual work). Occupational segregation leaves women in lower-paying positions and provides them with limited upward mobility.(see note 29) Indeed, a number of studies suggest the precarious nature of women’s jobs in the manufacturing sector, with frequent spells of unemployment and a reduced ability to negotiate wages and working conditions.(see note 30) This makes the development of specific skills more difficult and therefore tends to make women generally remain as low-wage earners in the pool of unskilled workers.

All this is coupled with the erroneous perception that women's income is supplementary rather than central to households’ wellbeing. Gender stereotypes perpetuated through social norms assign women to unpaid social reproduction roles and functions, such as primary caregivers in the family and as those responsible for household chores, leaving women with very little time to improve their skills or seek new work opportunities. Because society places a low value on unpaid work and caring for others, such work remains at the core of gender discrimination. This “time poverty” contributes to perpetuating lower skill and educational levels for women and often limits their scope of employment to the informal economy, where paid and unpaid work can be more easily combined.(see note 31)

Ensuring that trade policy promotes women workers' interests

There are several ways of ensuring that workers in general – and women in particular – fully benefit from the employment opportunities arising from trade integration. The first is to ensure that the labour force, especially women, acquire the skills sought by expanding sectors. The upgrading of workers skills, especially in non-traditional occupations and higher technologies, would allow them to climb up the ladder of value chains in manufacturing and services. This can be achieved through appropriate education policies and expanded access to technical training.(see note 32)

The second is to eliminate the exploitation of workers and protect their labour rights through fully enforcing national legislation on labour standards and promoting decent working conditions. Any measure improving workers’ skills, employment stability, working conditions, unemployment insurance and workers’ benefits – such as paid leave, including parental leave, and health care – is likely to greatly benefit women workers, especially those in the most precarious conditions.(see note 33)

Third, if women are to play a greater role in the global economy, then household responsibilities need to be more equally shared between women and men. Given women’s asymmetrical responsibilities for unpaid activities, supportive social and labour policies are needed to facilitate a balance between their paid and unpaid work. Such policies should include more affordable and accessible childcare services, transportation and ICTs, to access services and market opportunities.(see note 34)

Trade policy should thus consider how it can enable women to become key actors in those sectors of the economy that benefit most from trade; it should provide development pathways for women into more technologically advanced and dynamic sectors of the economy; and account for the likely effects of widening or closing the gender wage gap and reducing women’s time poverty.

Women in small-scale enterprises affected by trade

Trade policies have a significant impact on the viability of micro and small enterprises and thus affect the large number of women who own or work in these businesses. International experience suggests that an efficient Small and Medium-sized Enterprises (SMEs) sector is conducive to rapid industrial growth and a flexible industrial structure. SMEs help economies stay resilient in times of economic crisis.(see note 35) While trade integration may offer opportunities for such enterprises to grow, it also exposes them to international competition. Small and micro enterprises generally operate in protected markets and a swift increase in foreign competition forces them to grow and upgrade technologically.(see note 36) Technological learning and upgrading is one of the processes that firms must go through in order to become more competitive, but this requires time and adaptation which cannot be achieved abruptly.

The necessary adaptation of enterprises to international competition tends to disproportionately affect women-owned or operated enterprises. Women entrepreneurs in developing countries often have less access to marketing networks, capital, credit and technical knowledge, all of which are essential to improving production competitiveness. In this regard, policies aimed specifically at facilitating access to credit for small enterprises, organizing exporter associations and providing technical training on the compliance requirements of the export markets are likely to smooth the transition of small and micro enterprises to an open market environment.(see note 37) Support should also be provided to women entrepreneurs to improve their business management skills.

Women in Informal Cross-border Trade

A rather underestimated phenomenon within international trade is informal cross-border trade. This activity involves a large percentage of women. According to UNECA, informal trade (including cross-border trade, domestic trade and re-export) is the main source of job creation in Africa, providing between 20 and 75 percent of total employment in most countries, with the exception of South Africa.(see note 38) In the Southern Africa Development Community (SADC) region, informal cross-border trade contributes around 30 to 40 percent of intra-SADC trade, with a value of US$ 17.6 billion per year. More importantly, 70 percent of informal cross border traders are women.(see note 39)

Traditionally, women cross-border traders were engaged in the sale of unprocessed and processed food (e.g., fish, salt and foodstuffs). Originally confined to jobs such as food selling and shop-assistants in businesses at border crossings, they are now involved in cross-border trading of a wide range of goods and services, creating informal distribution networks and credit systems that sustain livelihoods. Cross-border trading has resulted in new trans-national networks supported by common languages, culture and kinship.(see note 40)

Informal traders sustain their family livelihoods and contribute to their country's economy. Recently, they have cushioned the effects of the financial and the food crises. Women traders have been instrumental in establishing food distribution systems, which have protected food security, often without any support from the state for short-term credit, storage and travel assistance. Overall, informal traders, especially women, suffer from invisibility, stigmatization, violence, harassment - including sexual harassment - undue taxation, poor working conditions, inadequate communications, transport and funding (with little or non-existent access to credit as banks are inaccessible to operators who lack collateral or licenses) and a lack of recognition of their economic contribution.(see note 41)

Any policy aimed at improving informal traders' activities should include a formalization component that takes into account the scale of their activities and the standard of living of women traders. Measures such as access to credit, social safety nets –such as health insurance-, transport, foreign currency exchange, infrastructure for storage of goods, refrigeration of agricultural commodities and transport facilities, as well as access to health care, water and sanitation facilities and security services, and training of customs and police officers about women's rights, would greatly improve informal traders' activity and enhance their contribution to wealth creation and poverty reduction.(see note 42)

21 Seguino, S. (2009). "The road to gender equality: global trends and the way forward", in Social Justice and Gender Equity: Rethinking Development Strategies and Macroeconomic Policies, Berik, Rodgers and Zammit, eds. London: Routledge.

36 In the case of the Thai clothing industry, for instance, as the international competitiveness of the industry was faltering (due to wage rates growth), and the export quota system dismantled, the industry was forced to upgrade its production to higher value products. Many SMEs, which were unable to do so, were forced to exit the industry. Kohpaiboon A. (2008), Op. cit. Another example is that of Indian small enterprises in the auto components, electronics and garments sectors that have operated since long in a doubly protected market, namely protected from domestic large units and from international competition. Once they had to face intensifying market competition, they had to introduce drastic changes in their technologies. Bhavani T.A. (2006), Globalization and Indian Small Scale Industries, http://www.icassecretariat.org/node/65

39 Figures on the value of informal cross border trade in the SADC Region are from Southern Africa Trust, August 2008 quoted by UNIFEM in Unleashing the Potential of Women Informal Cross-Border Traders to Transform Intra-African Trade, Factsheet, 2010.